Is stamp duty applicable on resale flats?

[ecis2016.org] Do buyers have to pay stamp duty and registration charge on purchase of resale property? We examine

Among the several expenses associated with a property purchase, buyers have to pay the stamp duty and registration charges and the money for this has to be arranged from their own funds. Banks do not factor in the stamp duty and registration charges as part of the property value and issue 80% of the original property value as the home loan amount. This means the buyer has to arrange the remaining 20% amount for the purchase, along with the money for stamp duty (which may vary between 2% and 8% of the deal value) and registration charges (usually 1% of the sale value or a flat fee). A frequently asked question on various realty forums is: Is stamp duty applicable for resale flats? Let us find out.

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Stamp duty on resale flats

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Section 3 of the Indian Stamp Act, 1899, makes it mandatory for the parties involved in the process to pay stamp duty on sale deeds. Hence, a sale deed, irrespective of whether it is being executed for an under-construction property or a ready-to-move-in flat or a flat in the secondary market, must be registered. Thus, a buyer has to pay the applicable stamp duty and registration charges in his state, irrespective of whether it is an upcoming project or an old property, as long as a sale deed is executed.

If you are buying a house in Mumbai that will be ready for  possession, say, in two years, you will pay 2% as stamp duty and 1% as the registration charge on the purchase. The charges remain the same if you buy a property from the resale market. The same remains true for ready-to-move-in flats available with builders.

GST on resale properties

The relief in expense that buyers of resale properties enjoy, is in terms of the Goods and Services Tax (GST). As a ready-to-move-in flat does not fall under the ambit of work contract unlike under-construction homes, no GST is charged from the buyer at the time of purchase.

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However, if you are buying a property from a developer who has paid the GST for the house during its construction cycle, they would certainly add up those charges to the overall cost. This means that even though an invoice will not be raised and there will be no mention of the GST, the buyer will eventually bear the cost, anyhow.

Recall here that while the GST has subsumed several state and central levies on realty transactions, stamp duty and registration are not among those. Despite a recurring demand from businesses, industry experts and buyers, states have refrained from waiving stamp duty and registration charges completely, as these duties are the single-biggest sources of revenue generation for states.

[ecis2016.org] 11 facts about stamp duty levied on property purchase

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